Citi Pays $220m For Changi Space Amid Soaring Rents

Source : The Straits Times, Nov 2, 2007

CITIGROUP is paying $220 million to lease two new custom-built buildings in Changi Business Park that will eventually house up to 4,000 operational and backroom staff.

The global financial services group, which aims to grow in Singapore, said the new premises will help consolidate its operations at a site well away from soaring prime office rents.

OUTSIDE THE CITY: Citigroup will lease the two custom-built buildings, sited in an industrial area near the Singapore Expo, until 2016 and hopes to create a fun, eco-friendly, campus-like workplace there. -- PHOTO: CITIGROUP

'Singapore continues to migrate into a unique position for Citi's global businesses,' said Mr Piyush Gupta, Citi's head of Asean markets and banking and its country officer for Singapore.

'We want to be a global financial centre but costs are getting out of whack, not just those for people, but those for premises.'

Some prime office rents have nearly tripled in the past three years. Property consultants say there is increasing resistance to the rapid rent rises, with some firms either holding off expansion plans or moving to cheaper spots.
'For a big company like us, to continue scaling out in the centre of the city at $15 per sq ft (psf) doesn't make sense,' said Mr Gupta. He did not disclose the rental rate psf at the new premises.

About 1,100 Citi staff will move into the new premises, in an industrial area near the Singapore Expo, when the first phase is ready. Another 2,000 staff are expected in the second phase.

Ascendas Real Estate Investment Trust is developing the buildings starting this month. The first phase is set to be ready in the first quarter of 2009 and the second in late 2010.

The Changi blocks will house Citi's global software innovation team, two of its regional processing centres for securities, banking and transaction services, and its regional technology infrastructure support.

Citi's investment of about $220 million covers the capital, relocation, rental and operating costs. It will lease the buildings until 2016 and has an option to extend its lease for another six years.

Mr Gupta said Citi hopes to create a fun, eco-friendly, campus-like workplace at Changi, with features such as exercise rooms. 'Given today's war for talent, an important part of keeping employees engaged is the work environment,' he said.

The group, which currently occupies one million sq ft of space here, is in six spots; it has prime space in Capital Square and Centennial Tower as well as two Tampines locations.

Citi's space take-up will rise to 1.2 million sq ft when it fills the new space and vacates its Tampines premises.

Citi will be looking at new hires as it expands, but Mr Gupta did not say how many. It employs more than 8,500 people here, up from 7,500 two years ago.